Banking industry consolidation has raised concern about the supply of small business credit since
large banks generally invest lower proportions of their assets in small business loans. However,
we find that the likelihood that a small business borrows from a bank of a given size is roughly
proportional to the local market presence of banks of that size, although there are exceptions.
Moreover, small business loan interest rates depend more on the size structure of the market than
on the size of the bank providing the credit, with markets dominated by large banks generally
charging lower prices.